WINMARK CORP

In addition to the other information set forth in this report, including the important information in “Forward-Looking Statements,” you should carefully consider the “Risk Factors” discussed in our Annual Report on Form 10-K for the year ended December 27, 2025. If any of those factors were to occur, they could materially adversely affect our financial condition or future results, and could cause our actual results to differ materially from those expressed in its forward-looking statements in this report. Except as set forth below, we are aware of no material changes to the Risk Factors discussed in our Annual Report on Form 10-K for the year ended December 27, 2025.

As previously disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 16, 2026, the Company implemented a monthly Software Fee for all locations as well as a North American Advertising Fund for all Plato’s Closet locations. Additionally, the Company disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 14, 2026 the implementation of separate North American Advertising Funds for our Once Upon A Child and Play It Again Sports brands. As a result of the implementation of these fees, the Company has added an additional risk factor.

The Company’s implementation of a monthly Software Fee and the introduction of North American Advertising Funds for its Plato’s Closet, Once Upon A Child, and Play It Again Sports brands may adversely affect franchisee relationships and system performance.

The Company periodically implements system initiatives, including technology platforms, advertising programs, and related fees, that are intended to support brand development and operational consistency across its franchised systems. These initiatives, including the implementation of a North American Advertising Fund for its Plato’s Closet, Once Upon A Child, and Play It Again Sports brands and a monthly Software Fee may increase franchisee operating costs and may not result in immediate or uniform benefits for all franchisees. If franchisees view such initiatives as burdensome, ineffective, or misaligned with their business needs, franchisee satisfaction and compliance may be adversely affected. Any deterioration in franchisee relationships could negatively impact franchisee retention, the pace of new franchise development, and the overall performance of the Company’s franchise systems.